The P2P Foundation on Open Coops

Overview

The cooperative movement and cooperative enterprises are in the midst of a revival, even as some of their long-standing entities are failing. This revival is part of an ebb and flow of cooperativism, that is strongly linked to the ebb and flow of the mainstream capitalist economy. After systemic crisis such as the one in 2008, many people look at alternatives.

Yet, we can't simply look at the older models and revive them, we have to take into account the new possibilities and requirements of our epoch, and especially of the affordances that digital networks are bringing to us.

Here are a few ideas from the 'peer to peer' perspective, as we develop them in the context of the Peer to Peer Foundation.

First, let's start with a critique of the older cooperative models:

Yes coops are more democratic than their capitalist counterparts based on wage-dependency and internal hierarchy. But cooperatives that work in the capitalist marketplace tend to gradually take over competitive mentalities, and even if they would not, they work for their own members, not the common good.

Second, coops are generally not creating, protecting or producing commons. Like their for-profit counterparts, they most often work with patents and copyrights, doing their part in the enclosures of the commons.

Third, coops may tend to self-enclose around their local or national membership. Doing this, they leave the global arena open to the domination by for-profit multinationals.

These characteristics have to be changed, and can be changed today.

Recommendations

1. Unlike for-profits, the new cooperatives must work for the common good, a requirement that must be included in their own statutes and governance documents. This means that coops can't be for-profit, they have to work for social goods, and this must be inscribed in their statutes. Solidarity cooperatives, already active in social care in regions like Northern Italy and Quebec, are a important step in the right direction. In the current capitalist market model, social and environmental externalities are ignored, and left to the external state to regulate. In the new cooperative market model, externalities are statutorily integrated and a legal obligation.

2. Unlike co-ops that draw their membership from a single class of stakeholders, cooperatives must include all stakeholders in their management. Coops need to be multi-stakeholder governed. This means that the concept of membership must be extended to these other types of memberships, or that alternatives to the membership model must be sought, such as the newly proposed FairShares model.

3. The crucial innovation for our times is this though: Cooperatives must (co-)produce commons, and these commons must be of two types.

a. The first type is immaterial commons, i.e. using open and shareable licenses to that the global human community can build on cooperative innovations and in turn enrich them. At the P2P Foundation, we have introduced the concept of Commons-Based Reciprocity Licenses. These licenses are designed to create coalitions of ethical and cooperative enterprise around the commons they are co-producing. The key rules of such licenses are: 1) the commons are open to non-commercial usage 2) the commons are open to common good institutions 3) the commons are open to for-profit enterprises who contribute to the commons. The exception introduced here is that for-profit companies that do not contribute to the commons have to pay for the use of the license. This is not primarily to generate income, but to introduce the notion of reciprocity in the market economy. In other words, the aim is to create an ethical economy, a non-capitalist market dynamic.

b. The second type is the creation of material commons. We are thinking here of the creation of commons funding for the manufacturing equipment for example. Following proposals by Dmytri Kleiner, cooperatives could float Bonds, to which all cooperative members (of all other coops in the system) could contribute, creating a commons fund for manufacturing. The coop seeking funds would obtain the machinery without conditions, but the owners would be all the cooperators, which would gradually build up a basic income from the income generated by the fund.

4. Finally we must address the issue of global social and political power. Following the lead of the transnational Sociedad Cooperativa de las Indias Electrónicas, we propose the creation of global phyles. A phyle is a global business-ecosystem that sustains commons and their community of contributors. Here is how this would work. Imagine the existence of a global open design community for the design of open agricultural machines (or any other product or service you can imagine). These machines are effectively manufactured and produced in a system of open and distributed microfactories, close to the of need. But, all these micro-coops would not exist in a isolated fashion, merely connected through the global and 'immaterially-focused' global open design community. Instead, they would also be interconnected through a global cooperative uniting the microfactories. The combination of such global phyles would be the seed for a new form of global and social political power, representing the global ethical economy. Ethical entrepreneurial coalitions and phyles can engage in post-market and post-market coordination of physical production, by moving towards open accounting and open supply chain practices.

In summary, though traditional cooperatives have played an important and progressive role in human history, their format needs to be updated to the networked era by introducing p2p and commons producing aspects.

Our recommendations for the new era of open cooperativism are:

1. That coops need to be statutorily (internally) oriented towards the common good

2. That coops need to have governance models including all stakeholders

3. That coops need to actively co-produce the creation of immaterial and material commons

4. That coops need to be organized socially and politically on a global basis, even as they produce locally.

Characteristics

Criteria as Proposed by Michel Bauwens

That coops need to be statutorily (internally) oriented towards the common good

That coops need to have governance models including all stakeholders

That coops need to actively co-produce the creation of immaterial and material commons

That coops need to be organized socially and politically on a global basis, even as they produce locally.

Criteria as Proposed by Josef Davies-Coates

"Co-ops that combine best practices from the international co-operative movement with best practices from the open source software and hardware communities are now possible. Soon anyone will be able to set up an Open Co-op and invite all their stakeholders to help finance, govern and organise the co-op online."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

Examples

"Sensorica are an ‘Open Value Network’ focussed on two primary activities: creating open hardware products; and developing the Open Value Network (OVN) model. OVNs are variously described as “people creating value together, by contributing work, money and goods, and sharing the income” a “framework for many-to-many innovation” and a “model for commons-based peer production.” The basic concept is very similar to the Bettermeans “contribution-based-rewards” idea, but in OVNs contributions other than completed tasks are also accounted for. They are currently working with Bob Haugen and Lynn Foster at Mikorizal Software to develop a prototype open source value accounting platform called ValNet."

"Enspiral is made up of three parts: The Enspiral Foundation, Enspiral Services and Startup Ventures. I’d say they’re the best current example of an Open Co-op, but how they actually describe themselves is as “a virtual and physical network of companies and professionals working together to create a thriving society” and as an “experiment to create a collaborative network that helps people do meaningful work.” A core part of their strategy is to open source their model. In short, not only are they doing almost exactly what United Diversity wants to do — they’re also building the open source tools actually needed to do it!

The Enspiral Foundation is the charitable company at the heart of the Enspiral network. It’s the legal custodian of assets held collectively by the network, and the entity with which companies and individuals have a formal relationship. Decisions are made using Loomio and budgets are set using Cobudget.

A network of professionals work together in teams to offer Enspiral Services, a range of business services under one roof. By default members pool 20% of their invoices into a collective bucket, 25% of which goes to the Foundation. Loomio and Cobudget are then used to decide how to spend the rest. For Startup Ventures, Enspiral works with social entrepreneurs to launch start-ups who then support the work of the Foundation, and Enspiral as a whole, through flexible revenue share agreements: ventures choose their own contribution rate, usually around 5% of revenue."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

Tools

"Originally started by Cambridge-based entrepreneur Emily Mackay, Microgenius is the UK’s first platform for community share offers and is now part of the Community Shares Unit. Societies can also sell shares via Crowdfunder and BuzzBnk, and can advertise share issues on Ethex, the Trillion Fund, and on Shares.coop — where the widest range of live Community Share Offers in the UK are listed. Co-operative Companies Limited by Shares can do equity crowdfunding on Crowdcube (which also powers Microgenius) and Seedrs.

Open source platforms specifically created to help open and/or co-operative projects include: Goteo for crowdfunding the commons; Open Funding and Bountysource for cofunding free software; Gittip for giving small weekly cash gifts to people you love and are inspired by; Snowdrift, a monthly matched patronage system; and Coopfunding.net, a wordpress powered crowdfunding platform for co-ops in Spain (we’ve got plans for something similar in the UK). Catarse, Selfstarter and tilt are other open source options, and there are numerous bitcoin powered platforms out there, too (e.g. Swarm)."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

"One Clicks Orgs, a social enterprise whose strapline is “Legal Structures and Group Voting Made Easy,” created the One Click Co-op in partnership with Co-operatives UK and NESTA. Launched in June 2013 and approved by UK regulators it is the first fully-online co-operative structure in the world. The open source platform permits members to contribute agenda items, browse archived minutes and participate in votes electronically. It’s pretty awesome, but having been built on a relative shoestring also pretty basic. Only Co-operatives UK’s multi-stakeholder co-operative rules are supported and you can’t, for example, the balance the interests of stakeholder groups by giving them different proportions of overall control (like you can with the Somerset Rules)."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

"Loomio — a free and open source tool for collaborative decision-making — is what happened when Enspiral met Occupy. Enspiral were committed to being a flat organisation, empowering employees to be autonomous and involved in leadership and decision making. But without the right platform, the overheads of engaging lots of people made it hard to deliver on this grand vision. In practice, only a few people were making most of the important decisions. Similarly, Occupy activists were finding it hard to make consensus decisions with large groups of people. Loud voices dominated and people with less time to commit to the process were being marginalised. They were missing out on the power of including a truly diverse range of perspectives. Together they developed Loomio."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

"Cobudget is another open source app being developed by Enspiral. It works like this: each month contributions to collective funds are published. Everyone can see who contributed what and how much money is in the budget. Basic core expenses (previously collectively agreed on Loomio) are subtracted and what’s left is the discretionary budget. Each person or company retains the right to allocate their part of discretionary funds and anyone in the network can start a “bucket” ­— a proposal to do work that requires funding. They write up a proposal making their case for why the work they want to do will benefit everyone and why they are the right person to deliver the project. Everyone then considers the buckets and decides which ones to “fill” with their portion of the discretionary budget. If people collectively feel like a project is a good use of resources, it will get funded. If there are critical budgeting priorities taking precedence, “nice to have” projects won’t get any funds that round. Funders can split up their allocations as they like, or put it all in one bucket. In aggregate, the result is a budget that reflects the collective priorities of the group, determined in proportion to real stakeholding and in the context of the big picture goals. The entire process takes place transparently."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

"Building on the work of Loomio and Cobudget the Open App Ecosystem is an Enspiral project to develop suite of integrated and open sourced apps which support transparent, democratic and decentralised organising. The aim is for the software to act as a delivery mechanism for cultural viruses which decentralise money, information and control and promote happiness, empowerment and wellbeing throughout an organisation. They also have the side effect of helping organisations become more efficient, resilient and adaptable."
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)

Antecedents and Inspirations

Josef Davies-Coates:

"The Open Organisations Project emerged. Their goal was “to explain how to set up and maintain transparent, accountable and truly participative communities” and they came up with a useful set of six process and eight functional rules together with some basic guidelines for how to implement them."

The Viable System Model (VSM): "Stafford Beer used the term ‘viable system’ to describe the same thing and outlined some of their properties in the VSM.

In short, the model says that in order to be viable (i.e., able to autonomously adapt and survive in response to a changing environment) a system must have the following five sub-systems:

System 1: Interacting operational units. Think organs in a body, or players in a team.

System 2: Responsible for stability and conflict resolution between operational units.

System 3: An ‘Internal Eye’ optimising and generating synergies between operational units.

System 4: An ‘External Eye’ allows strategies and plans to adapt to a changing environment.

System 5: Where ultimate authority lies and is responsible developing policy.

Bettermeans and The Open Enterprise Manifesto: In April 2010 a project called Bettermeans “formed to promote the values of openness, transparency, autonomy, contribution-based-rewards (meritocracy), democracy, integrity, and values-oriented, purpose-driven work” released The Open Enterprise Manifesto. It was a familiar story: replace “the command and control hierarchy” with “collaboration and open participation;” create organisations “more like living dynamic networks, and less like pyramids;” plus the standard mentions of Linux, Wikipedia, Mondragón and Visa to demonstrate how aspects of the model had already been shown to work at scale. Bettermeans were trying to bring these various aspects together in a single cohesive model, and they made a pretty good stab at building the necessary tools to make such a model widely available and adoptable."

Two prominent social progressive movements are faced with a few contradictions and a paradox. On the one side, we have a re-emergence of the co-operative movement and worker-owned enterprises which suffer from certain structural weaknesses. On the other, we have an emergent field of open and Commons-oriented peer production initiatives which create common pools of knowledge for the whole of humanity, but are dominated by start-ups and large multinational enterprises using the same Commons. Thus we have a paradox: the more communist the sharing license used in the peer production of free software or open hardware, the more capitalist the practice. To tackle this paradox and the aforementioned contradictions, we tentatively suggest a new convergence that would combine both Commons-oriented open peer production models with common ownership and governance models, such as those of the co-operatives and the solidarity economic models."

Books

Josef Davies-Coates:

"Two books, A New Way to Govern: Organisations and Society after Enron by Shann Turnbull (2002), and Gaian Democracies: Redefining Globalisation and People-Power by John Jopling and Roy Madron (2003) were both very influential on our thinking. They introduced us to the principles behind Spain’s huge co-operative network Mondragon, and other large scale business with innovative organisational structures such VISA International and Semco in Brazil.

In A New Way to Govern Turnbull summarised the terminal flaws of command and control hierarchies: the tendency of centralised power to corrupt; the difficulty of managing complexity; and the suppression of “natural” — human —checks and balances. In their place he proposed organisations which are able to “break complexity down into manageable units, and decompose organisational decision-making into a network of independent control centres.” In short, his thesis argued that command and control hierarchies must be replaced by “network governance” and that where this includes stakeholders — not merely staff but customers, communities, suppliers or distributors — a whole new dimension of economic, social and political benefit opens up.
(http://stirtoaction.com/open-co-ops-inspiration-legal-structures-and-tools/)"